Better Ways to Manage Employee Performance Reviews

The dreaded performance review—an annual ritual that unifies employees and managers alike in their mutual dislike for a necessary evil. And the worst part? After the time, energy, and effort spent by employees and management, very few feel the process was worth their while.

A Broken System

To be honest, in large part, performance reviews are a broken system, dating back to the industrial revolution, when employees were seen as replaceable parts in a machine, not knowledge workers who innovate a company. GE, the original champion of performance reviews and forced rankings, recently announced they are abandoning the process because it hurts performance.

Although some call for the death of the performance review, it’s been proven they can provide considerable value to a company when done well. So many crucial decisions hinge upon performance reviews—promotions, bonuses, disciplinary action, employee development, and terminations. But several factors cripple their effectiveness:

· Purpose: Although the purpose is built into the name (to review performance, obviously), employees and management mostly use annual reviews to focus on qualifications for promotions and raises.

· Time: Before restructuring their process, Deloitte spent 2 million man-hours a year on filling out forms, meetings, and creating rating systems for their performance reviews.

· Frequency: Holding reviews once a year doesn’t allow managers to provide relevant feedback to foster employee growth. Nor does it allow managers the ability to reward employees for excellent work in real-time.

· Subjectivity: Like teachers, some managers “grade” harshly and some give “A’s” to anyone who shows up. And employees, who either don’t want to jeopardize career advancement or a co-worker’s position, often sugarcoat their feedback about managers and peers rather than tell the truth.

BambooHR’s Performance Management is not only built around industry research but also our own customer research where we uncovered best practices from scores of innovative companies. Using this research, we’ve removed those crippling factors found in the purpose, time, frequency, and subjectivity of performance reviews. By doing so, we’ve transformed them into a rewarding (dare we say, enjoyable?) experience.

Purpose

Shifting the focus to evaluating engagement and productivity will give you the data to make those crucial decisions, like promotions. It will also help you determine how happy and engaged your employees are.

Time

Employees and managers spend a short amount of time electronically completing reviews with questions targeted to extract the most valuable feedback. You can then generate professional reports based off these reviews to measure employee engagement, productivity, and cultural fit.

Frequency

Our performance reviews are designed to occur several times a year (or however often you like), allowing managers to give frequent feedback and make changes in real-time. This gives performance reviews the most impact. In fact, GE has chosen to replace what they consider a broken performance review system with one that uses frequent feedback.

Subjectivity

By asking managers what actions they would take to keep an employee rather than how they feel about an employee, we cut through any subjective feedback and get to the heart of the matter. What about sugar coated feedback from employees in their manager and peer to peer evaluations? Our evaluation questions are based off of research done by Deloitte showing that a company’s happiest employees have these three traits in common:

By using these criteria to measure engagement, employees can be honest without feeling like they’ve put their career at risk.

Performance reviews don’t have to be a necessary evil dreaded by your entire company. Instead, they can become a tool that provides feedback you can actually use to measure engagement and performance. We provide analytics on that feedback in a clear, easy to consume format that allows you to know where to take action.